UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, DC 20549
(Mark One)
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No
As of November 1, 2002, 35,634,967 shares of the Company's Class A common stock, $.001 par value per share, and 45,734,493 shares of the Company's Class B common stock, $.001 par value per share, were outstanding.
Nu Skin, Pharmanex, Big Planet, Nu Skin 180º and LifePak are trademarks of Nu Skin Enterprises, Inc. or its Subsidiaries.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTSNU SKIN ENTERPRISES, INC.Consolidated Balance Sheets(in thousands, except share amounts)
The accompanying notes are an integral part of these consolidated financial statements.
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NU SKIN ENTERPRISES, INC.Consolidated Statements of Income (Unaudited)(in thousands, except per share amounts)
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NU SKIN ENTERPRISES, INC.Consolidated Statements of Cash Flows (Unaudited)(in thousands)
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NU SKIN ENTERPRISES, INC.Notes to Consolidated Financial Statements
1. THE COMPANY
2. NET INCOME PER SHARE
3. DIVIDENDS PER SHARE
4. DERIVATIVE FINANCIAL INSTRUMENTS
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5. REPURCHASE OF COMMON STOCK
6. COMPREHENSIVE INCOME
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7. GOODWILL AND OTHER INTANGIBLE ASSETS
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8. SEGMENT INFORMATION
9. NEW PRONOUNCEMENTS
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10. PURCHASE OF LONG-TERM ASSET
11. RELATED PARTY TRANSACTIONS
12. SUBSEQUENT EVENTS
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The following Management’s Discussion and Analysis should be read in conjunction with the Company’s Management’s Discussion and Analysis included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2001, filed with the Securities and Exchange Commission (“SEC”) on April 1, 2002, and all other Company filings, including Current Reports on Form 8-K, filed with the SEC through the date of this Report.
Revenue increased 13% and 9% to $252.9 million and $713.9 million for the three- and nine-month periods ended September 30, 2002 from $224.2 million and $653.1 million for the same periods in 2001. This increase was due primarily to growth in the North and Southeast Asia regions. Foreign currency fluctuations positively impacted reported revenue for the third quarter of 2002, but negatively impacted revenue for the nine-month period ending September 30, 2002. Eliminating the impact of foreign currency fluctuations would have resulted in overall constant currency revenue growth of 10% and 11% for the third quarter of 2002 and the nine months ended September 30, 2002 compared to the same prior-year periods. The Company’s international distributor convention held in September 2002, continued distributor interest in participating in the Company’s plans to expand operations in China and the requirement that distributors qualify as executives in order to participate in China, planned product introductions and strategic initiatives also contributed to the growth in revenue. Revenue during the quarter in foreign markets, including Japan and South Korea, was negatively impacted by sales to distributors from those markets who attended the international distributor convention held in the United States. Such sales were recorded in North American revenue.
Revenue in North Asia increased 9% and 8% to $154.4 million and $439.9 million for the three- and nine-month periods ended September 30, 2002, from $141.4 million and $408.6 million for the same periods in 2001. In Japan, revenue increased 7% and 4% to $138.2 million and $391.8 million for the three- and nine-month periods ended September 30, 2002 from $128.7 million and $377.3 million for the same prior-year periods. In local currency, revenue in Japan increased 5% and 8% for the three- and nine-month periods ended September 30, 2002 compared to the same prior-year periods. Revenue growth in Japan was driven by continued leveraging of technology tools for distributors, which the Company believes has helped to better attract and retain distributors and customers, as well as by successful product introductions and growth in automated orders. Reported U.S. dollar results reflect the impact of currency fluctuations. The weakening of the Japanese yen during the first half of 2002 compared to the same prior-year period negatively impacted first quarter 2002 revenue results in Japan by 12% and second quarter 2002 revenue results in Japan by approximately 4% when compared to the same quarters in the prior year. The strengthening of the Japanese yen during the third quarter of 2002 compared to the prior-year quarter positively impacted third quarter 2002 results by 2% when compared to the same quarter in the prior year. In South Korea, revenue increased 28% and 53% to $16.2 million and $48.0 million for the three- and nine-month periods ended September 30, 2002 from $12.7 million and $31.3 million for the same periods in 2001. This revenue growth in South Korea was driven by a 36% increase in executive distributors as well as successful product introductions. In local currency, revenue in South Korea increased 18% and 49% for the third quarter and nine months ended September 30, 2002 compared to the same prior-year periods, but declined sequentially from the second quarter of 2002, reflecting a slowing growth rate in this market.
Revenue in Southeast Asia increased 29% and 34% to $51.2 million and $143.4 million for the three- and nine-month periods ended September 30, 2002 from $39.8 million and $107.1 million for the same periods in 2001. Distributor interest in the Company’s plans in China and the opening of the Malaysian market in November 2001 spurred the growth in this region. Revenue in Singapore and Malaysia increased to $16.5 million and $49.0 million for the three- and nine-month periods ended September 30, 2002 from $11.7 million and $24.9 million for the same prior-year periods, respectively, primarily as a result of the inclusion of operations in Malaysia in 2002 results. In addition, revenue in Taiwan increased 22% and 9% to $20.8 million and $57.4 million for the three- and nine-month periods
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ended September 30, 2002 from $17.1 million and $52.7 million for the same periods in 2001. Revenue growth in Taiwan was driven by a 20% increase in executive distributors as well as distributor enthusiasm throughout the Southeast Asia region resulting from the opening of Malaysia and planned expansion of operations in China.
Revenue in North America, consisting of the United States and Canada, increased 10% to $40.5 million for the three months ended September 30, 2002 from $36.7 million for the same period in the prior year. This increase is due to the revenue increase in the United States during the third quarter of 2002 to $38.2 million from $34.9 million for the same prior-year period. Revenue in the United States for the third quarter of 2002 increased as a result of sales to distributors from foreign markets attending the Company’s international distributor convention in September 2002, which generated revenue of approximately $6.0 million. This increase was partially offset by reduced sales of low margin Big Planet products and services, which include the Company’s Internet service and telecommunications products. This decrease reflects the Company's strategy of de-emphasizing low margin products to increase overall Company profitability. For the nine months ended September 30, 2002, revenue in North America decreased 7% to $110.1 million from $118.8 million for the same period in 2001. This decrease is due to the revenue decline in the United States to $103.9 million for the nine months ended September 30, 2002 compared to $113.6 million for the same prior-year period. This decrease is primarily due to the revenue decline from relatively lower margin Big Planet products and services, which reflects a shift in emphasis to Nu Skin and Pharmanex initiatives for the nine months ended September 30, 2002 compared to the same period in 2001. When comparing the first nine months of 2002 to 2001 in the United States, incremental revenue generated from convention sales to international distributors in the third quarter of 2002 was offset by incremental revenue generated from convention sales to international distributors at the convention held in the first quarter of 2001. Revenue in Canada increased to $2.4 million and $6.2 million for the three- and nine-month periods ended September 30, 2002 from $1.7 million and $5.2 million for the same prior-year periods.
Revenue in the Company’s other markets, which include its European and Latin American operations, increased 6% and 10% to $6.7 million and $20.5 million for the three- and nine-month periods ended September 30, 2002 from $6.3 million and $18.6 million for the same periods in 2001. This increase in revenue is due to a 9% and 13% increase in revenue in Europe for the three and nine months ended September 30, 2002 compared with the same prior-year periods, respectively. In local currency, revenue in Europe was even in the third quarter of 2002 compared to the same prior-year period.
Gross profit as a percentage of revenue increased to 80.3% and 80.1% for the three- and nine-month periods ended September 30, 2002 compared to 79.5% and 79.8% for the same prior-year periods, respectively. The increase in gross profit was due to decreases of revenue related to low margin Big Planet products and services in 2002. The increase in gross profit for the third quarter of 2002 was also positively impacted by fluctuations in foreign currency compared to the same prior-year period. The Company purchases a significant majority of goods in U.S. dollars and recognizes revenue in local currencies. Consequently, the Company is subject to exchange rate risks in its gross margins.
Distributor incentives as a percentage of revenue increased to 40.3% and 39.4% for the three- and nine-month periods ended September 30, 2002 compared to 39.4% and 39.3% for the same prior-year periods, respectively. The decrease in revenue from Big Planet, which pays lower commissions than Nu Skin and Pharmanex, impacted the increase in distributor commissions during the third quarter of 2002.
Selling, general and administrative expenses as a percentage of revenue decreased to 29.8% and 29.9% for the three- and nine-month periods ended September 30, 2002 compared to 31.4% and 32.5% for the same periods in the prior year, respectively. Without the impact of $2.6 million and $8.1 million of amortization of intangibles recorded in the three- and nine-month periods ended September 30, 2001, respectively, which was not recorded in 2002 due to the implementation of SFAS 142, selling, general and administrative expenses as a percentage of revenue would have been 30.3% and 31.2% for the three- and nine-month periods ended September 30, 2001. The decrease in selling, general and
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administrative expenses as a percentage of revenue resulted from higher revenue generated without increasing operating expenses as well as improved efficiencies and profitability from the Company’s cost-saving technology and automated reordering initiatives. In U.S. dollar terms, selling, general and administrative expenses were $75.3 million and $213.3 million for the three and nine months ended September 30, 2002 compared to $70.5 million and $211.9 million for the same periods in the prior year. This increase in expenses in the third quarter resulted from an additional $5.0 million in expenses for the Company’s international distributor convention and costs associated with the Company’s expansion in China, which were offset by a reduction in amortization. Additionally for the nine-month period, the increase in U.S. dollar expenses was impacted by the $2.5 million of expenditures related to the Company’s sponsorship of the 2002 Winter Olympic Games in Salt Lake City in the first quarter of 2002. Additionally for the nine-month period, expenses associated with the 2002 international distributor convention and expansion of operations in China were largely offset by the expenses associated with the convention held in the first quarter of 2001 and a reduction of amortization in 2002 as a result in the change in accounting standards.
Other income (expense), net decreased $0.9 million and $7.8 million for the three- and nine-month periods ended September 30, 2002 compared to the same prior-year periods resulting in net other expense of $0.6 million and $2.4 million, respectively. The decrease in other income (expense), net is primarily related to the foreign currency gains recorded in the first quarter of 2001 as well as the foreign currency losses in 2002 resulting from the impact of a stronger Japanese yen to the U.S. dollar on the translation of yen-based bank debt and other intercompany balances into U.S. dollars for financial reporting purposes.
Provision for income taxes increased to $9.4 million and $27.5 million for the three- and nine-month periods ended September 30, 2002 from $7.4 million and $21.6 million for the same prior-year periods. This increase was largely due to the increases in operating income as compared to the same prior-year periods, as the effective tax rate remained at 37.0% of pre-tax income.
Net income increased to $15.9 million and $46.9 million for the three- and nine-month periods ended September 30, 2002 from $12.5 million and $36.7 million for the same prior-year periods. Net income increased primarily because of the factors noted above in “revenue”, “gross profit” and “selling, general and administrative” and was somewhat offset by the factors noted in “distributor incentives”, “other income (expense), net” and “provision for income taxes” above.
Historically, the Company’s principal needs for funds have been for operating expenses including distributor incentives, working capital (principally inventory purchases), capital expenditures and the development of operations in new markets. The Company has generally relied on cash flow from operations to meet its cash needs and business objectives without incurring long-term debt to fund operating activities.
The Company typically generates positive cash flow from operations due to favorable gross margins, the variable nature of distributor incentives, which constitute a significant percentage of operating expenses, and minimal capital requirements. The Company generated $67.7 million in cash from operations during the nine-month period ended September 30, 2002 compared to $49.5 million during the nine months ended September 30, 2001. This increase in cash generated from operations in 2002 compared to the same prior-year period is primarily related to increased operating profits as well as reduced taxes paid in 2002 versus 2001, in part due to the utilization of foreign tax credits.
As of September 30, 2002, working capital was $156.6 million compared to $152.5 million as of December 31, 2001. Cash and cash equivalents at September 30, 2002 and December 31, 2001, were $105.4 million and $75.9 million, respectively. This increase in cash balances was due to the increase in cash from operations, a portion of which was returned to stockholders in the form of share repurchases and dividend payments during the first nine months of 2002.
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On March 6, 2002, the Company paid $4.8 million, including transaction costs, to acquire rights to technology to be used in a portable laser-based tool for measuring the biological impact of taking Pharmanex dietary supplements. In addition to the cash payment, the purchase price also included the issuance of 106,667 shares of the Company’s Class A common stock valued at approximately $900,000, and includes contingent payments approximating $8.5 million and up to 1.2 million additional shares of the Company’s Class A common stock if specific development and revenue targets are met. On April 19, 2002, the Company acquired First Harvest International, LLC, a small dehydrated food manufacturer. The acquisition agreement provides for a purchase price of up to $3.5 million. As of September 30, 2002, the Company had made cash payments of approximately $1.6 million, which includes the assumption of certain liabilities. Products manufactured by First Harvest will be sold by the Company and will also be used in implementing a new humanitarian initiative for distributors.
Capital expenditures, primarily for equipment, computer systems and software, office furniture and leasehold improvements, were $13.3 million for the nine-month period ended September 30, 2002. In addition, the Company anticipates additional capital expenditures in 2002 of approximately $6 million to further enhance its infrastructure, including enhancements to computer systems and Internet-related software in order to extend its Internet capabilities and further expansion of the Company’s retail stores and related infrastructure in China.
The Company’s long-term debt consists of 9.7 billion Japanese yen-denominated ten-year senior notes issued to The Prudential Insurance Company of America. The notes bear interest at an effective rate of 3.03% per annum and are due October 2010, with annual principal payments beginning October 2004. As of September 30, 2002, the outstanding balance on the notes was 9.7 billion Japanese yen, or $79.7 million.
On May 10, 2001, the Company entered into a $60.0 million revolving credit agreement (the “Revolving Credit Facility”) with Bank of America, N.A. and Bank One, Utah N.A. for which Bank of America, N.A. acted as agent. The proceeds may be used for working capital, capital expenditures and other purposes including repurchases of the Company’s outstanding shares of Class A common stock. There were no outstanding balances relating to the Revolving Credit Facility as of September 30, 2002. The Revolving Credit Facility was reduced to $45.0 million on May 10, 2002, and will be further reduced to $30.0 million on May 10, 2003. The Revolving Credit Facility expires on May 10, 2004. The Japanese notes and the Revolving Credit Facility are both secured by a guaranty of the Company’s material Subsidiaries and by a pledge of 66% of the outstanding stock of Nu Skin Japan.
Since August 1998, the board of directors has authorized the Company to repurchase up to $90.0 million of the Company’s outstanding shares of Class A common stock. The repurchases are used primarily for the Company’s equity incentive plans. During the three and nine months ended September 30, 2002, the Company repurchased 150,000 and 752,000 shares of its Class A common stock for an aggregate price of approximately $1.7 million and $8.7 million, respectively. As of September 30, 2002, the Company had repurchased a total of approximately 7.4 million shares of its Class A common stock for an aggregate price of approximately $67.5 million.
In July 2002, the board of directors declared a quarterly cash dividend of $0.06 per share for all classes of common stock. This quarterly cash dividend of $4.9 million was paid on September 25, 2002, to stockholders of record on September 6, 2002. Additionally, on October 22, 2002, the board of directors declared a quarterly cash dividend of $0.06 per share for all classes of common stock to be paid in December 2002. Management believes that cash flow from operations will be sufficient to fund its future dividend payments. However, the declaration of dividends is subject to the discretion of the Company’s board of directors and will depend upon various factors, including the Company’s net earnings, financial condition, cash requirements, future prospects and other factors deemed relevant by the Company’s board of directors.
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The Company had related party payables of $0.1 million and $7.1 million at September 30, 2002 and December 31, 2001, respectively. In addition, the Company had related party receivables of $1.2 million and $13.0 million, respectively, on those dates. These balances at December 31, 2001 are largely related to the note issued in connection with the Company’s acquisition of Big Planet, Inc. and an outstanding obligation from a private affiliate related to the Company’s distributor stock option program. The private affiliate is controlled by Blake Roney, Brooke Roney, Steve Lund and Sandra Tillotson, officers and directors of the Company. The decrease in related party receivables was due to the repayment of a $6.4 million loan to a significant shareholder, who is the sister of Blake and Brooke Roney, directors and officers of the Company, and the prepayment of approximately $2.4 million to satisfy the outstanding obligations related to the Company’s distributor stock option program. The shareholder loan of $6.4 million, which was entered into in 1997, was repaid with shares of the Company’s Class A common stock on May 3, 2002 in accordance with the terms of the loan. The decrease in related party payables was due to the Company paying the remaining balance of approximately $6.0 million resulting from the Company’s acquisition of Big Planet, Inc. in 1999.
Management believes the Company has sufficient liquidity to meet its obligations on both a short- and long-term basis. Management currently believes that existing cash balances together with future cash flows from operations will be adequate to fund the cash needs relating to the implementation of the Company’s strategic plans. The majority of the Company’s expenses are variable in nature and as such, a potential reduction in the level of revenue would reduce the Company’s cash flow needs. However, in the event that the Company’s current cash balances, future cash flow from operations and current lines of credit are not sufficient to meet its obligations or strategic needs, the Company would consider raising additional funds in the debt or equity markets or restructuring its current debt obligations. Additionally, the Company would consider realigning its strategic plans including a reduction in capital spending and a reduction in the level of stock repurchases or dividend payments.
The following critical accounting policies and estimates should be read in conjunction with the Company’s significant accounting policies and new accounting pronouncements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2001. Management considers the most critical accounting policies to be recognition of revenue, accounting for the impact of foreign currencies and accounting for income taxes. In each of these areas, management makes estimates based on historical results, current trends and future projections. The Company operates in more than 30 countries and generates the majority of its revenue and income in foreign currencies in international markets. Consequently, fluctuations in foreign currencies, particularly the Japanese yen, will have a significant impact on reported results. The Company believes that it applies appropriate financial standards in its consolidation process to properly account for these types of fluctuations. In addition, the Company pays income taxes in many foreign jurisdictions based on the profits realized in those jurisdictions, which can be significantly impacted by terms of intercompany transactions between its foreign affiliates and the Company. Deferred tax assets and liabilities are created in this process and the Company records these tax obligations in accordance with appropriate accounting standards as explained in the notes to its consolidated financial statements.
The Company adopted the provisions of SFAS 142, “Goodwill and Other Intangible Assets” effective January 1, 2002. As a result of a review of all such assets, operating results for the three- and nine-month periods ended September 30, 2002, were impacted by a $2.6 million and $8.1 million reduction of amortization of goodwill and other indefinite-life intangibles, respectively. As of September 30, 2002, the Company had approximately $156 million of unamortized goodwill and other indefinite-life intangible assets. SFAS 142 requires that these assets be tested for impairment at least annually in accordance with its provisions. The transitional impairment tests were completed and did not result in an impairment charge. To the extent an impairment is identified, the Company will record the amount of the impairment as an operating expense in the period in which it is identified.
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As of January 1, 2002, the Company adopted EITF 01-09, which relates to revenue recognition principles as well as the classifications of certain promotional items as cost of goods sold rather than operating expenses. The impact of the adoption of EITF 01-09 did not have a material impact on its financial statements. In the event certain of the Company’s expenses, including distributor incentives, were deemed to be reductions of revenue rather than operating expenses, its reported revenue would be reduced as would its operating expenses. However, since the Company’s global distributor compensation plan does not provide rebates or selling discounts to distributors who purchase its products and services, management believes that no adjustment to reported revenue and operating expenses is necessary.
In addition to general economic factors, the direct selling industry is impacted by seasonal factors and trends such as major cultural events and vacation patterns. For example, most Asian markets celebrate their respective local New Year in the first quarter, which generally has a negative impact on that quarter. Management believes that direct selling in Japan, the United States and Europe is also generally negatively impacted during the month of August, which is in the Company’s third quarter, when many individuals, including the Company’s distributors, traditionally take vacations.
The following table provides information concerning the number of active and executive distributors as of the dates indicated. Active distributors are those distributors who were resident in the countries in which the Company operated and purchased products during the three months ended as of the date indicated. An executive distributor is an active distributor who has achieved required monthly personal and group sales volumes.
A majority of the Company’s revenue and many of the Company’s expenses are recognized primarily outside of the United States, except for inventory purchases which are primarily transacted in U.S. dollars from vendors in the United States. Each subsidiary’s local currency is considered the functional currency. All revenue and expenses are translated at weighted average exchange rates for the periods reported. Therefore, the Company’s reported revenue and earnings will be positively impacted by a weakening of the U.S. dollar and will be negatively impacted by a strengthening of the U.S. dollar. For example, in 2001, the Japanese yen significantly weakened, which reduced the Company’s operating results on a U.S. dollar reported basis. The Company’s 2002 operating results could be similarly harmed if the Japanese yen weakens from current levels. Given the uncertainty of exchange rate fluctuations, the Company cannot estimate the effect of these fluctuations on the Company’s future business, product pricing, results of operations or financial condition.
The Company seeks to reduce its exposure to fluctuations in foreign exchange rates through the use of foreign currency exchange contracts, through intercompany loans of foreign currency and through its Japanese yen denominated debt. The Company does not use derivative financial instruments for trading or speculative purposes. The Company regularly monitors its foreign currency risks and periodically takes measures to reduce the impact of foreign exchange fluctuations on its operating results.
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The Company’s foreign currency derivatives are comprised of over-the-counter forward contracts with major international financial institutions. As of September 30, 2002, the Company had $92.0 million of these contracts with expiration dates through June 2003. All of these contracts were denominated in Japanese yen. For the three months and nine months ended September 30, 2002, the Company recorded $0.8 million and $4.6 million, respectively, of gains in operating income, and $1.6 million of gains in other comprehensive income for the three months ended September 30, 2002, related to its forward contracts. The Company recorded $4.3 million of losses in other comprehensive income for the nine months ended September 30, 2002, related to its forward contracts. Based on the Company’s foreign exchange contracts at September 30, 2002, the impact of a 10% appreciation or 10% depreciation of the U.S. dollar against the Japanese yen would not represent a material potential loss in fair value, earnings or cash flows against these contracts. This potential loss does not consider the underlying foreign currency transaction or translation exposures to which the Company is subject.
With the exception of historical facts, the statements contained in Management’s Discussion and Analysis of Financial Condition and Results of Operations, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Reform Act”) which reflect the Company’s current expectations and beliefs regarding the future results of operations, performance and achievements of the Company. These statements are subject to risks and uncertainties and are based upon assumptions and beliefs that may not materialize. These forward-looking statements include, but are not limited to, statements concerning:
In addition, when used in this report, the words or phrases, "will likely result," "expects," "anticipates," "will continue," "intends," "plans," "believes," "the Company or management believes," and similar expressions are intended to help identify forward-looking statements.
The Company wishes to caution readers that the Company's operating results are subject to various risk and uncertainties that could cause the Company's actual results and outcomes to differ materially from those discussed or anticipated. Reference is made to the risks and uncertainties included in Item 5 (incorporated by reference to Exhibit 99.1) of the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2002, which contains a detailed discussion of the risks and uncertainties related to the Company's business. The Company also wishes to advise readers not to place any undue reliance on the forward-looking statements contained in this report, which reflect the Company's beliefs and expectations only as of the date of this report. The Company assumes no obligation to update or revise these forward-looking statements to reflect new events or circumstances or any changes in its beliefs or expectations. Some of the risks and uncertainties that might cause actual results to differ from those anticipated include, but are not limited to, the following:
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The information required by Item 3 of Part I of Form 10-Q is incorporated herein by reference from the section entitled "Currency Risk and Exchange Rate Information" in "Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations" of Part I and also in Note 4 to the Financial Statements contained in Item 1 of Part I.
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Evaluation of disclosure controls and procedures.
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-14(c) and 15d-14(c) under the Exchange Act) as of a date (the “Evaluation Date”) within 90 days prior to the filing date of this report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the Evaluation Date, our disclosure controls and procedures were effective in timely alerting them to the material information relating to us (or our consolidated subsidiaries) required to be included in our periodic SEC filings.
Changes in internal controls.
There were no significant changes made in our internal controls during the period covered by this report, or to our knowledge, in other factors that could significantly affect these controls subsequent to the date of their evaluation.
Reference is made to the Company's Annual Report on Form 10-K for the year ended December 31, 2001.
None.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
November 13, 2002
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I, Steven J. Lund, Chief Executive Officer of the registrant, certify that:
/s/ Steven J. Lund Steven J. LundChief Executive Officer
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I, Corey B. Lindley, Chief Financial Officer of the registrant, certify that:
/s/ Corey B. Lindley Corey B. LindleyChief Financial Officer
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EXHIBIT INDEX
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